Company A's quarterly sales revenue and operating costs are $12,000 and $9,500, respectively. Operating costs include $1,500 of leasing charge for computers. A new product line will increase sales revenue by 30 percent and costs (other than the leasing charge, which remains unchanged) by 35 percent.

1. If Company A includes the new product line, then:
   1. sales revenue will increase by $3,200.
   2. operating costs will increase to $12,300.
   3. operating profits will increase by $1,100.
   4. operating costs are not relevant.
2. The leasing charge:
   1. is differential.
   2. is relevant to the decision.
   3. plays no role in the decision.
   4. will not change in the future.
3. New trends in cost accounting include:
   1. the just-in-time method.
   2. total quality management.
   3. benchmarking and continuous improvement.
   4. All of the above.
4. Ethical conflicts in cost accounting:
   1. are governed by the code of ethics of the professional organizations.
   2. will not have implications for cost accountants' decisions.
   3. should be resolved to meet the demands of managers.
   4. will never lead to resignation of cost accountants.
5. Financial statements for external users are characterized as:
   1. user-specific.
   2. managerial reports.
   3. governed by GAAP.
   4. not consistent with GAAP.
6. Which of the following statements is correct?
   1. Design for manufacturability is not compatible with activity-based costing.
   2. Performance of key suppliers and business partners must be constantly evaluated.
   3. Cost of quality is a system that identifies the costs of producing high-quality items.
   4. Enterprise resource planning system duplicates the effort and costs of standalone systems.